Chewy shares leap 13% after surprise swing to quarterly profit

Chewy Taco Cat Halloween Costume
  • Chewy shares climbed by 13% Wednesday following the fourth-quarter results from the pet-products seller.
  • The company swung to a profit of $0.05 a share, surprising analysts who had expected a loss of $0.10 a share.
  • Chewy’s first-quarter sales forecast of $2.11 billion to $2.13 billion was above Wall Street’s target.
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Shares of Chewy jumped Wednesday after the online pet-products retailer unexpectedly swung to a fourth-quarter profit, bolstered by millions of more people last year who took on duties of caring for animals during the COVID-19 pandemic.

The company late Tuesday posted fourth-quarter earnings of $0.05 a share, compared with expectations for a loss of $0.10 a share in a survey of analysts by Refinitiv. A year earlier, Chewy posted a per-share loss of $0.15.

Sales of $2.04 billion beat Wall Street’s target of $1.96 billion as the company dealt with “surging volume”. Sales a year ago were $1.35 billion.

Chewy shares climbed by 13% to $90.95, a move that sets up the stock to trim its year-to-date loss to less than 1%. The stock price began to decelerate in early February but it’s more than doubled from about $36 over the past 12 months.

The company added 5.7 million net active customers in 2020, representing 42.7% annual growth. It also said it widened its product offerings to include gift cards, personalized items, and vet services. “Pet adoptions surged in 2020 as millions of homebound people and families sought out the comfort, companionship, and joy of pet parenthood” during the pandemic, the company said.

Chewy forecast first-quarter sales of $2.11 billion to $2.13 billion, higher than the average analyst forecast of $2.07 billion.

Wedbush analysts on Wednesday raised their price target to $100 from $90 and reiterated their outperform rating on Chewy following the company’s “solid earnings beat, above-consensus guidance, and a path to a 2021 beat and even higher long-term earnings power.”

Chewy’s cofounder and former chief executive, Ryan Cohen, is leading a turnaround effort at video game retailer and Reddit-community favorite GameStop.

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Ulta Beauty tumbles as profit outlook disappoints and CEO Dillon plans to step down

ulta
  • Ulta Beauty dropped nearly 9% on Friday following quarterly earnings the prior evening.
  • Ulta’s earnings-per-share view of $8.85 to $9.30 fell short of Wall Street’s target of $10.61.
  • CEO Mary Dillion will transition to the role of the board’s executive chair.
  • See more stories on Insider’s business page.

Ulta Beauty shares were knocked sharply lower on Friday after the cosmetics retailer’s yearly earnings guidance missed Wall Street’s target. The company also said CEO Mary Dillon will step down from the top role.

The company late Thursday forecast fiscal 2021 per-share earnings of $8.85 to $9.30, which includes the impact of about $850 million in share buybacks. Analysts were looking for earnings of $10.61 per share, according to data compiled by Refinitiv. Ulta’s revenue forecast was $7.2 billion to $7.3 billion, below the average analyst forecast of $7.32 billion.

The company in a separate announcement said Dillon will transition to the role of executive chair of its board of directors, with President Dave Kimbell to succeed her as CEO.

Shares dropped 8.5% to close at $318.15. They fell by as much as 12% to an intraday low of $306.06. The stock has gained about 11% this year and has climbed by 54% over the past 12 months.

“Throughout my time with the company, I have worked closely with our board on strategic succession plans, and I believe now is the right time to begin a CEO transition,” said Dillon in the statement, noting that she had led the company for eight years. Kimbell joined Ulta Beauty as chief marketing officer in 2014.

For the fourth quarter ended January 30, Ulta posted adjusted earnings were $3.41 per share, down from $3.83 per share a year ago but higher than expectations of $2.35 per share. Revenue of $2.2 billion was ahead of Wall Street’s projection of $2.08 billion but down from $2.31 billion a year earlier.

Dillon will be nominated to stand for election to the company’s board of directors at its 2021 annual stockholders meeting to be held on June 2.

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Ulta Beauty tumbles 11% as profit outlook disappoints and CEO Dillon plans to step down

ulta
  • Ulta Beauty dropped 11% on Friday following quarterly earnings the prior evening.
  • Ulta’s earnings-per-share view of $8.85 to $9.30 fell short of Wall Street’s target of $10.61.
  • CEO Mary Dillion will transition to the role of the board’s executive chair.
  • See more stories on Insider’s business page.

Ulta Beauty shares were knocked sharply lower on Friday after the cosmetics retailer’s yearly earnings guidance missed Wall Street’s target. The company also said CEO Mary Dillon will step down from the top role.

The company late Thursday forecast fiscal 2021 per-share earnings of $8.85 to $9.30, which includes the impact of about $850 million in share buybacks. Analysts were looking for earnings of $10.61 per share, according to data compiled by Refinitiv. Ulta’s revenue forecast was $7.2 billion to $7.3 billion, below the average analyst forecast of $7.32 billion.

The company in a separate announcement said Dillon will transition to the role of executive chair of its board of directors, with President Dave Kimbell to succeed her as CEO.

Shares dropped 11% to a low of $308.32 as trading in the regular session got underway. The stock had gained 21% so far in 2021 and has climbed by nearly 68% over the past 12 months.

“Throughout my time with the company, I have worked closely with our board on strategic succession plans, and I believe now is the right time to begin a CEO transition,” said Dillion in the statement, noting that she had led the company for eight years. Kimbell joined Ulta Beauty as chief marketing officer in 2014.

For the fourth quarter ended January 30, Ulta posted adjusted earnings were $3.41 per share, down from $3.83 per share a year ago but higher than expectations of $2.35 per share. Revenue of $2.2 billion was ahead of Wall Street’s projection of $2.08 billion but down from $2.31 billion a year earlier.

Dillon will be nominated to stand for election to the company’s board of directors at its 2021 annual stockholders meeting to be held on June 2.

Screen Shot 2021 03 12 at 8.24.40 AM
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Okta drops after company gives weak guidance and announces $6.5 billion Auth0 acquisition

Okta Auth0 deal
Okta cofounders Frederic Kerrest and CEO Todd McKinnon (top L to R) on a video call signing the agreement to acquire Auth0 for $6.5 billion with its cofounders CEO Eugenio Pace and Matias Woloski (bottom L to R)

  • Okta fell by nearly 10% Thursday as the ID-authentication software company’s outlook missed Wall Street’s view. 
  • The company expects a first-quarter adjusted loss of $0.20 to $0.21 a share compared with the consensus of a loss of $0.07. 
  • Okta plans to buy rival Auth0 in a transaction valued at $6.5 billion. 
  • Visit the Business section of Insider for more stories.

Okta shares dropped nearly 10% Thursday following a quarterly outlook that missed Wall Street’s estimate while the identity-authentication software maker said it plans to buy rival Auth0 in a $6.5 billion stock deal.

The company late Wednesday projected a first-quarter adjusted loss of $0.20 to $0.21 per share, which was wider than the consensus estimate of a per-share loss of $0.07. It also expects year-over-year growth in total revenue to $237 million to $239 million compared with Wall Street’s view of $237 million.

Shares of Okta lost as much as 9.6% when it hit an intraday low of $218. The stock later pared the decline to 4.5%. Over the past 12 months, the shares have advanced about 79%.

The company’s projection came within its fourth-quarter financial report and alongside a separate announcement about planning to buy Auth0. Okta said its guidance does not include any potential impact from the proposed Auth0 deal.

Okta said the pending deal will stoke growth in the $55 billion identity market. Auth0 will run as an independent business unit inside of Okta and both of its platforms will be supported and integrated over time.

The transaction “will accelerate our innovation, opening up new ways for our customers to leverage identity to meet their business needs,” said Todd McKinnon, Okta’s CEO and co-founder, in the statement.

For the fourth quarter, the company posted adjusted earnings of $0.06 a share, swinging from a loss of $0.01 a year ago. Revenue of $234.7 million increased from $167.3 million in the same period a year ago.

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Best Buy slides 9% on weak holiday sales and soft 2022 revenue guidance

best buy coronavirus
  • Best Buy shares hit an intraday low of $103.39 in heavy volume after the retailer’s fourth-quarter report. 
  • The company’s quarterly revenue of $16.9 billion fell short of expectations of $17.2 billion. 
  • Jefferies says Fry’s Electronics closing shop could bring $400 million in sales for Best Buy. 
  • Visit the Business section of Insider for more stories.

Best Buy stock slumped Thursday, hurt by fourth-quarter revenue that fell short of Wall Street’s target and the electronic retailer’s outlook for a potential decline in same-store sales in the current quarter.

Revenue was $16.94 billion for the period ended January 31. That result missed expectations of $17.2 billion but was higher than $15.2 billion in revenue generated in the same quarter last year.

Demand for technology “remains at elevated levels” at the start of fiscal 2022 but the company said there’s also still significant uncertainty about how customer trends will develop with the COVID-19 pandemic still ongoing. It forecast a decline of 2% to growth of 1% in comparable sales for the fiscal year.

Shares slumped as much as 9% with an intraday low of $103.39 then trimmed the loss to 5.8%. Volume was heavy, with 4.1 million shares traded to outpace average daily volume of 3.04 million.

The same-store sales outlook “assumes that customers resume or accelerate spend in areas that were slowed during the pandemic, such as travel and dining out, in the back half of the year,” said Best Buy in its earnings statement.

Adjusted earnings for the fourth quarter were $3.10 per share, beating Wall Street’s projection of $3.45 per share. The adjusted earnings rose from $2.84 per share a year earlier.

What could help sales for Best Buy, said Jefferies on Thursday, is the bust-up of Fry’s Electronics which on Wednesday said it was closing its 31 stores in nine states after nearly 36 years in business.

“[We] believe the total dollar share clinched by Best Buy could be in excess of $400 million. We reiterate our Buy-rating on shares,” said Jonathan Matuszewski, a consumer analyst at Jefferies, in a note to clients.

Matuszewski said the estimate was based on its overlap analysis that suggested an average of two Best Buy stores within a 15-minute drive of Fry’s locations, with more than 20% of markets having three to four Best Buy stores in close proximity. Fry’s said it is shutting its doors “as a result of changes in the retail industry and the challenges posed by the COVID-19 pandemic.”

Best Buy’s stock has risen roughly 7% this year and has logged a 12-month rise of 36%.

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Home Depot will surge 35% for 5 key reasons, according to Bank of America

home depot
  • Bank of America raised its price target for Home Depot’s shares to $360, which would mark 35% upside from Tuesday’s closing price. 
  • Home Depot’s capacity to spend $6 billion to $10 billion in share buybacks is a potential driver for earnings per share, the bank said. 
  • The investment bank said the retailer has been consistent in posting double-digit monthly same-store sales growth.  
  • Visit the Business section of Insider for more stories.

Home Depot’s  sales growth and the potential for up to $10 billion in share buybacks are among five reasons to buy into the home-improvement retailer, Bank of America said Wednesday, raising its price target on the stock to $360 from $355.

In a note on Wednesday, the investment bank reiterated its buy rating on the company. The higher call would represent upside of 35% from Tuesday’s closing price of $267.24.

Shares of Home Depot were under pressure Wednesday following a 3% decline the day before, after the company did not provide fiscal 2021 profit guidance as it monitors how consumer spending will evolve.

Home Depot’s fourth-quarter revenue of $32.26 billion was higher than a year ago and beat Wall Street’s expectations of $30.7 billion.

Bank of America said Home Depot’s fourth-quarter results marked the third consecutive quarter of same-store, or comparable, sales growth of more than 20%. It said monthly comparable sales figures have run consistently above 20% since May 2020 and that Home Depot has indicated it was seeing that pace in February.

“This illustrates HD’s consistent and strong execution within a strong category of retail,” wrote BofA research analysts led by Elizabeth Suzuki.

Alongside sales growth, BofA outlined four other reasons it said investors should consider Home Depot shares worth buying:

Capacity for share buybacks

Home Depot had $7.9 billion in cash on its balance sheet as of January 31, which the investment bank said is more than 3 times the average year-end cash balance of the previous five years. The retailer plans to keep a cash cushion of at least $4 billion throughout 2021 but BofA expects the company to spend at least $6 billion on share repurchases throughout the course of the year.

Home Depot, however, “could buy back as much as $10 billion in shares without cutting into its cash threshold, by our estimates,” the analysts said. “We view this as a significantly underappreciated upside risk” to per-share earnings.

Above-average wallet share

There should be a shift in consumer spending to “away-from-home” categories in the second half of 2021, but “home is still the place to be (and spend) for now,” said the bank as it referenced year-to-date spending data and its proprietary indicator of consumer spending at home improvement stores.

Taking market share

Home Depot estimates it has captured 275 basis points of market share growth between 2018 and 2020 as a result of its One Home Depot initiative, according to the note.

The “company’s performance during the pandemic underscores the benefit of these initiatives, and illustrates the advantage of being the #1 retailer in the category with a very healthy balance sheet, i.e. the ability to out-invest competitors,” wrote BofA.

The right investments

In terms of investments, the acquisition of industrial products company HD Supply late last year could add another “4-5% in top-line growth in 2021 above comp” and provide exposure to post-pandemic “reopening” opportunities through the maintenance, repair & operations, or MRO, market. 

“Additionally, HD’s investments in hourly wages and benefits for associates should attract talent, engender loyalty, and limit attrition as other retailers follow suit,” said BofA.

Shares of Home Depot traded at $254.84 at 11:57AM E.T. on Wednesday. 

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Dropbox falls as charge on real estate in shift to remote leads to wider quarterly net loss

Drew Houston Dropbox
Dropbox CEO Drew Houston

  • Dropbox fell as much as 5% on Friday after turning in a fourth-quarter net loss of $346 million. 
  • The company took a quarterly charge on real-estate assets following its shift to remote work during the COVID-19 outbreak. 
  • Dropbox’s adjusted earnings of $0.28 per share beat expectations of $0.24 per share. 
  • Visit the Business section of Insider for more stories.

Dropbox stock fell as much as 5% Friday, with the cloud-storage provider turning in a fourth-quarter net loss as a shift to remote work led to a charge related to real estate.

The company’s net loss was $345.8 million, wider than its loss of $6.6 million a year ago and a swing from profit of $32.7 million in the third quarter.

Shares of Dropbox fell as much as nearly 5% to $23.31. It’s added on nearly 10% during the year and 8.5% over the last 12 months.

Dropbox recorded a non-recurring impairment charge of $398.2 million in the fourth quarter for “right-of-use and other lease related assets.”

The charge stems from its reassessment of real estate assets, which will include subleasing some of its space. In October, the San Francisco-based company said employees working remotely “will be the primary experience” and “the day-to-day default for individual work” under its “Virtual First” program. 

Dropbox acknowledged the “abrupt shift” to remote work in 2020 during which numerous companies transitioned to work outside of offices because of the COVID-19 pandemic.

The impairment charge was not part of its adjusted earnings, which came in at $0.28 per share compared with $0.16 a year earlier. Analysts, on average, had expected earnings of $0.24 per share.

Revenue climbed to $504.1 million from $446 million a year earlier, surpassing Wall Street’s target of $498 million.

 

 

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